HUMBOLDT UNIVERSITY

I. Global Minerals never agreed to be bound by the arbitration agreement

Global Minerals never agreed to be bound by the arbitration agreement. As the arbitration
agreement is contained in Art. 20 CPC, consent to arbitration could only be inferred from an
agreement to the underlying contract. RESPONDENT alleges that Global Minerals has become
either “a party to the contract or at least a quasi-party responsible for payment”. In contrast,
it is CLAIMANT’s submission that Global Minerals is not a party to the CPC [1.]. Furthermore,
Global Minerals is not bound by the arbitration agreement as a guarantor [2.].
1. Global Minerals is not a party to the CPC
93. Global Minerals is not a party to the CPC. First, this can be derived from the wording of the
CPC itself. Art. 1 CPC explicitly names the contracting parties as Mediterraneo Mining SOE
and Vulcan Coltan Ltd., thereby limiting the legal obligations arising from the CPC to
CLAIMANT and RESPONDENT. This is further supported by the fact that the Parties did not
impose any direct obligations on Global Minerals [PROC. ORD. NO. 2, P. 65, PARA. 17]. This
conscious choice of the Parties should be acknowledged, so as to find that Global Minerals
was never meant to become a party to the CPC.
94. Second, this can be deduced from the pre-contractual negotiations. Prior to conclusion of the
CPC, Mr Storm had always insisted that Global Minerals would not become a party to any of
CLAIMANT’s contracts [PROC. ORD. NO. 2, P. 63, PARA. 7]. Moreover, during the
contractual
negotiations, the Parties had discussed multiple modes of payment. While CLAIMANT
preferred an open account payment, RESPONDENT made clear that such would only be offered
to Global Minerals as a contracting party [EXHIBIT R 1, P. 41, PARA. 7]. Thus, the fact that the
Parties finally opted for payment via letter of credit is tantamount to the fact that Global
Minerals has never become party to the CPC.
95. Third, this is further emphasised by RESPONDENT’s subsequent conduct. Pursuant to
Art. 26 CISG, “a declaration of avoidance of the contract is effective only if made by notice
to the other party”. In contrast, both of RESPONDENT’s declarations of avoidance
[EXHIBIT C 7, P. 13; EXHIBIT R 4, P. 44] were only addressed to CLAIMANT and
unambiguously referred to the contract “between Vulcan Coltan and Mediterraneo Mining
SOE” [EXHIBIT C 7, P. 13; EXHIBIT R 4, P. 44]. Global Minerals has never been informed
about the avoidance of the contract it supposedly was party to.
96. RESPONDENT’s assertion is solely based on the fact that Global Minerals “endorsed” the
contract with its signature. It thereby attempts to impose severe legal obligations on Global
Minerals from a term that was not introduced by the Parties as a legal term [PROC. ORD.
NO. 2, P. 64] and has no legal consequences in any jurisdiction involved [PROC. ORD. NO. 2,
P. 69, PARA. 45]. Rather, the ordinary meaning of an endorsement is merely to declare one’s
public approval or support. The endorsement was therefore product of Global Minerals’
satisfaction and approval of the contract and illustrated its willingness to assist in the
establishment of the L/C. In conclusion, Global Minerals has never become party to the CPC
and is not bound by the arbitration agreement.
2. Global Minerals is not bound by the arbitration agreement as a guarantor
97. RESPONDENT might argue that Global Minerals functions as a guarantor responsible for
payment under the CPC. However, Global Minerals has never become a guarantor [a)]. Even
if the Tribunal should find differently, Global Minerals is not bound by the arbitration
agreement [b)].
a) Global Minerals has not become a guarantor
98. Global Minerals’ endorsement cannot be construed as a guarantee, as this would
fundamentally contradict the intent of all parties involved. Generally, a guarantee to a contract
is limited in its scope and secures specific obligations as opposed to the entire underlying
contract. As such, a guarantee agreement to a contract constitutes a separate and self sufficient
arrangement [BORN, P. 1458]. Yet, neither are there provisions regulating the
outlines of such guarantee, nor did negotiations between the Parties ever establish any
underlying framework [PROC. ORD. NO. 2, P. 64, PARA. 12]. In fact, the mere term “endorsed
for" does not regulate any of the essential terms of a guarantee. Therefore, it cannot amount to
a self-sufficient agreement.
99. Moreover, an interpretation of Global Minerals’ endorsement as a guarantee would disregard
the express considerations of the Parties prior to conclusion of the CPC. During the
negotiations, it was held that providing sufficient security for payment was crucial [EXHIBIT
R 1, P. 40, PARA. 5]. Therefore, the Parties had discussed a parent guarantee to be provided by
Global Minerals and payment by means of a letter of credit. The Parties rejected the parent
guarantee by Global Minerals and opted for payment via letter of credit in conjunction with
the endorsement provided by Global Minerals [PROC. ORD. NO. 2, P. 64, PARA. 12]. Payment
by letter of credit alone had previously always sufficed as security for Respondent’s
purposes [EXHIBIT R 1, P. 40, PARA. 5] and made any form of additional security superfluous.
Pursuant to Artt. 4, 5 CPC, the L/C had to be established irrevocably and before shipment.
Therefore, payment was guaranteed as long as RESPONDENT itself complied with its
obligations under the CPC. It appears far-fetched and devoid of all commercial reason to
assume that Global Minerals had nevertheless agreed to provide both forms of security.
b) Even if Global Minerals had become a guarantor, it would not be bound by the
arbitration agreement
100. Even if Global Minerals had become a guarantor, it would not be bound by the arbitration
agreement. As a guarantee constitutes an agreement separate from the underlying contract
[SUPRA, PARA. 98], consent to provide a guarantee cannot by itself be interpreted as consent to
the arbitration agreement governing the underlying contract [GERMAN FEDERAL COURT
1977;
FRENCH COURT OF CASSATION 1992; SWISS FEDERAL COURT 2008; GRUNDSTAD V.
RITTASPLUNDH TREE EXPERT CO. V. BATES; SN PRASAD V. MONNET FINANCE].
This principle can only be departed from “when [the guarantor] expressly agrees to the
obligation to arbitrate”[PROSHRED HOLDINGS V. CONESTOGA DOCUMENTS]. Such
consent has never been given by Global Minerals.
101. The endorsement of the CPC by Global Minerals cannot be construed as implied consent to
arbitration. In a similar case decided by a United States Court of Appeals, two parties
concluded a contract while two others guaranteed the performance by virtue of a signature on
the main contract [GRUNDSTAD V. RITT]. The guarantee was titled ”we hereby agree to
guarantee all of the provisions of the within Agreement, and especially the performance […]”
[IBID., PARA. 6]. The court held that the mere fact that the guarantee agreement and the main
contract containing the arbitration clause were concluded on the same document did not
suffice in order to prove the guarantor’s consent to arbitrate [IBID., PARA. 16]. Further, the
court found that “in the absence of language within the guaranty specifically stating that [the
guarantor] would be bound by the arbitration clause contained within the Agreement, we are
not convinced that, as a matter of law, he agreed to be so bound” [IBID., PARA. 18].
CLAIMANT respectfully requests the Tribunal to apply the ratio of GRUNDSTAD V. RITT to
the present case. Global Minerals has never expressly agreed to be bound, there is no indication
that it wished to be bound, and thus it should not be considered bound.
102. Other courts have more readily found a guarantor to have consented to an arbitration
agreement in the underlying contract. In STELLAR SHIPPING V. HUDSON SHIPPING, the
High Court of England and Wales found that the guarantor consented to the arbitration clause
merely by endorsing the main contract. The court considered such interpretation “to be both
the natural and the commercially sensible construction of Stellar’s endorsement as guarantor”
[STELLAR SHIPPING V. HUDSON SHIPPING, PARA. 51]. In STELLAR SHIPPING V.
HUDSON SHIPPING, the main contract contained an express guarantee clause in addition to the
endorsement of the contract. Therefore, the court found that the purpose of the endorsement
had gone beyond the mere provision of the guarantee. In the case at hand, no express
guarantee agreement was incorporated into the CPC, so that RESPONDENT relies on the
endorsement itself to be interpreted as a guarantee. Thus, the “natural and the commercially
sensible construction” of the endorsement would be, if at all, to construe it as an implied
guarantee. Any consent going beyond the provision of this guarantee would exceed the intent
of the Parties. Even as a guarantor, Global Minerals is not bound by the arbitration agreement.

MUNCHEN UNIVERSITY:

1. Art. 1 of the Contract Exhaustively Lists the Contracting Parties

11 Global Minerals is not a party to the Contract as Art. 1 of the Contract exhaustively lists the
parties of the Contract without making any reference to Global Minerals:
“Art 1: Contracting Parties
Seller: Mediterraneo Mining SOE, 5-6 Mineral Street, Capital City, Mediterraneo
Buyer: Vulcan Coltan Ltd, 21 Magma Street, Oceanside, Equatoriana” (Cl. Exh. C 1).

12 Accordingly, the Contract defines the respective obligations for CLAIMANT and
RESPONDENT. Thiscorresponds with the general nature of a sales contract pursuant to which
the seller is bound to deliver the goods and the buyer is obliged to pay the purchase price and
accept the goods (MISTELIS in: Kröll et al. Art. 1 § 25). Global Minerals, however, is not
mentioned in a single provision of the contract and therefore does not incur any obligations
(Proc. Order No. 2 § 17).
13 Thus, Mr Winter and Mr Summer signed for the seller and the buyer respectively, whereas
Mr Storm (Global Minerals) did not sign as a contracting party (Cl. Exh. C 1). Consequently,
Global Minerals is not automatically bound by the arbitration clause contained in the Contract.
2. Global Minerals Did Not Express Any Intention to Become a Party to the Contract
14 Art. 1 of the Contract is in line with Global Minerals’ conduct, which has to be interpreted
pursuant to Art. 8 CISG.
15 Art. 1(1)(a) CISG sets forth that the CISG applies to the sales contract at hand as the
contracting
parties have their places of business in different states, which have ratified the CISG
(Proc. Order No. 2 § 42). The interpretation of the arbitration agreement is therefore subject to
the
CISG (OLG Stuttgart, 15 May 2006 (Germany); SCHMIDT-AHRENDTS p. 217).
16 Art. 8(1) CISG stipulates that statements and other conduct of a party are to be interpreted
according to its intent where the other party knew or could not have been unaware what that
intent
was. When determining this intent, consideration is to be given to the negotiations of the parties
when concluding the contract (Art. 8(3) CISG).
17 The original subject of the negotiations leading to the Contract was a potential sales contract
over 100 metric tons of coltan to be paid against open account (Resp. Exh. R 1 § 6).
RESPONDENT made clear that it would only agree on these conditions if Global Minerals
became a contracting party (ibid. § 7). Global Minerals, however, wanted to keep its business
separate from CLAIMANT’s business (Reply to Counterclaim § 5) and insisted – as in all
negotiations with every supplier and customer for the Equatorianian market (Proc. Order No. 2 §
7) – that it would not become a party to the Contract (Reply to Counterclaim § 6).
18 Hence, CLAIMANT agreed on less favourable conditions, inter alia, a smaller amount of
coltan and different payment method, provided that Global Minerals would not become a party to
the
Contract. (cf. Resp. Exh. R 1 § 7). Therefore, RESPONDENT could not have been unaware of
Global Minerals’ intent not to become a party to the Contract as defined by Art. 8(1) CISG.
RESPONDENT, rather, knew of this intent since it only mentioned CLAIMANT and
RESPONDENT as the only parties to the Contract in both letters of avoidance (Cl. Exh C 7;
Resp. Exh. R 4).

19 In consequence, Global Minerals is not a party to the Contract between CLAIMANT and
RESPONDENT and can therefore not automatically be bound by the arbitration agreement
contained
therein.
II. Global Minerals Is Not Bound by the Arbitration Clause by Virtue of Its Endorsement
20 The Tribunal is respectfully requested to find that Global Minerals is not bound to the
arbitration
clause due to its signature since the endorsement does not impose liability upon Global
Minerals (1.). Even if the endorsement constituted some sort of obligation, the endorsement
cannot extend the scope of the arbitration agreement to Global Minerals (2.).
1. The Endorsement Does Not Impose Liability Upon Global Minerals
21 Global Minerals is not bound to the arbitration agreement due to its signature as it merely
endorsed
the Contract but did not consent to arbitration.
22 Mr Storm’s signature under the Contract, reading “Endorsed for: Global Minerals”, was
merely
meant to “approve and support” (Oxford Dictionaries, “endorse”) the Contract and did not
create any
liability for Global Minerals. Such liability was rendered obsolete as the mere payment method
already provided sufficient security for RESPONDENT (a). As no security was needed directly
from
Global Minerals, the endorsement served the same purpose as a comfort letter (b). Last, a
reasonable businessperson would not have understood Global Minerals of having assumed
liability
through the endorsement (c).
a) The Payment Method Itself Rendered Liability of Global Minerals Obsolete
23 During the contract negotiations, RESPONDENT made clear that Global Minerals would
have to provide some sort of security (Resp. Exh. R 1 § 7). Multiple ways of doing so were
discussed
(Proc. Order No. 2 § 12). The parties, in the end, agreed on payment by a commercial letter of
credit by Global Minerals’ bank prior to RESPONDENT delivering the coltan (Resp. Exh. R 1 §
7; Proc. OrderNo. 2 § 12).
24 By issuing a commercial letter of credit, the issuing bank fulfils the payment obligations at
instruction of an applicant, which reassures the seller that he will receive the purchase price
(MCCURDY p. 543; cf. WIELE p. 81). It is irrelevant for the seller who the applicant is, as he
receives payment by the bank nonetheless (cf. MANN p. 402). Therefore, it only made sense for
RESPONDENT to attach no importance to Global Minerals’ exact legal status (Resp. Exh. R 1 §
7).
25 As RESPONDENTS payment claim was already sufficiently secured by the chosen payment
method itself, a direct involvement of Global Minerals through the endorsement was
unnecessary.

b) The Endorsement Served the Purpose of a Comfort Letter

26 As opposed to assuming liability, the endorsement of Global Minerals must rather be
understood as serving the purpose of a “comfort letter”.
27 A comfort letter is “an instrument written by a third party and is designed to encourage the
creation of an agreement between two other parties” (BERNSTEIN/ZEKOLL p. 98 et seq.;
cf. DIMATTEO/SACASAS p. 362-365). Parent companies often use such comfort letters to soothe
concerns in regard to creditworthiness of its subsidiary indicating their support
(cf. DIMATTEO/SACASAS p. 367). However, these comfort letters do not create legally binding
obligations and are therefore not enforceable (cf. SACASAS/WIESNER p. 321 et seq.;
cf. BERNSTEIN/ZEKOLL p. 98 et seq.). Rather, they merely express moral support (ibid.).
28 Global Minerals’ endorsement served this very purpose. Global Minerals and RESPONDENT
have been doing business with each other for a long time (Reply to Counterclaim § 6). Global
Minerals initiated the contact between CLAIMANT and RESPONDENT and paved the way for
negotiations (ibid.). Global Minerals thus encouraged the conclusion of the Contract between the
parties from the very beginning and ever since. Global Minerals, in particular, soothed the banks
concerns regarding CLAIMANT’s creditworthiness with its endorsement and facilitated the
establishment of the letter of credit (cf. Proc. Order No. 2 § 25).
29 In light of these circumstances, the Tribunal is requested to find that the endorsement did not
impose any legally binding and thus enforceable obligations but merely served the purpose of a
comfort letter.
c) A Reasonable Businessperson Would Have Understood That Global Minerals Had
Not Assumed Liability by Virtue of the Endorsement
30 A reasonable businessperson within the meaning of Art. 8(2) CISG would not have
considered
Global Minerals to be a party to the arbitration agreement due to the efforts Global Minerals has
made to limit its liability. RESPONDENT is an entity acting commercially on the coltan market
and
thus has to be considered a business. Pursuant to Art. 8(2) CISG, the standard for interpretation
must be that of a reasonable businessperson.
31 RESPONDENT was correct in stating that Global Minerals formed CLAIMANT for the
purpose of, inter alia, shielding itself from liability (Answ. to Req. § 26). Moreover, Global
Minerals refused RESPONDENT’s proposal to be joined to any contract as an additional buyer
(cf. Reply to Counterclaim § 6). RESPONDENT could thus not have expected Global Minerals
to be liable for CLAIMANT’s contractual obligations. To assume liability through the
endorsement would have been economically unreasonable, as it would contradict Global
Minerals’ self-protecting measures.
32 In conclusion, RESPONDENT does not have any claims vis-à-vis Global Minerals. There is,
therefore, no economic reason for RESPONDENT to have Global Minerals become part of the
arbitration
agreement.
2. Even If the Tribunal Found an Obligation for Global Minerals Deriving From the
Endorsement, it Does Not Bind Global Minerals to the Arbitration Agreement
33 Even if the Tribunal were to find that the endorsement imposes any legal obligation upon
Global
Minerals, this obligation does not suffice grounds for the joinder of Global Minerals to the
arbitration.
34 Even a party issuing a formal guarantee cannot be bound by an arbitration agreement
contained in the contract it guarantees for unless this was the parties’ true intention (Cour
d’Appel de Paris,m 7 July 1994 (France); Asplundh Tree v Bates (USA); Accord Interocean
Shipping v National Shipping & Trading (USA); Swensen’s Ice Cream v. Corsair, (USA);
FOUCHARD et al. § 498). Global Minerals, that did not even become a gurantor but merely
endorsed the Contract (Proc. Order No. 2 § 12; see supra §§ 20 et seqq.), all the more cannot be
forced to arbitrate against its will.
35 As Global Minerals never consented to arbitrate (see supra §§ 21 et seqq.), it is not bound by
the
arbitration agreement.